##### 



UNITED STATES SECURITES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended June 30, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period from
    to   Commission file number:
    000-25955
      Waste Services, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

01-0780204(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   1122
    International Blvd., Suite 601, Burlington, Ontario, Canada
    L7L 6Z8 (Address
    of principal executive offices) (zip code)
  (905) 319-1237
 (Registrants telephone
    number, including area code)
  þ o
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ




---



##### 



TABLE OF
    CONTENTS
  PagePART
    I  FINANCIAL INFORMATIONItem 1. Financial
    StatementsUnaudited Condensed
    Consolidated Balance Sheets as of June 30, 2007 and
    December 31, 2006


2Unaudited Condensed
    Consolidated Statements of Operations for the three and six
    months ended June 30, 2007 and 2006


3Unaudited Condensed
    Consolidated Statement of Shareholders Equity for the six
    months ended June 30, 2007


4Unaudited Condensed
    Consolidated Statements of Cash Flows for the six months ended
    June 30, 2007 and 2006


5Notes to Unaudited
    Condensed Consolidated Financial Statements


6Item 2.
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations


30Item 3.
    Quantitative and Qualitative Disclosures About Market
    Risk


42Item 4. Controls
    and Procedures


43PART
    II  OTHER INFORMATIONItem 1. Legal
    Proceedings


44Item 1A. Risk
    Factors


44Item 2.
    Unregistered Sales of Equity Securities and Use of
    Proceeds


44Item 3. Defaults
    upon Senior Securities


44Item 4. Submission
    of Matters to a Vote of Security Holders


44Item 5. Other
    Information


44Item 6.
    Exhibits


44Signatures


45




---



##### 



PART I. FINANCIAL INFORMATION
   Item 1.
    Financial
    Statements  WASTE
    SERVICES, INC.



UNAUDITED
    CONDENSED CONSOLIDATED BALANCE SHEETS

(In
    thousands, except share amounts)  June 30,


December 31,2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
16,045


$
8,532Accounts receivable (net of
    allowance for doubtful accounts of $553 and $572 as of
    June 30, 2007 and December 31 2006, respectively)


66,795



51,804Prepaid expenses and other current
    assets


9,350



6,224Current assets of discontinued
    operations






4,559Total current assets


92,190



71,119Property and equipment,
    net


183,322



140,673Landfill sites, net


196,075



195,881Goodwill and other intangible
    assets, net


421,980



350,035Other assets


18,420



10,667Non-current assets of
    discontinued operations






96,688Total assets

$
911,987


$
865,063LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
25,528


$
24,033Accrued expenses and other current
    liabilities


61,281



53,566Short-term financing and current
    portion of long-term debt


1,069



3,975Current liabilities of
    discontinued operations






4,784Total current liabilities


87,878



86,358Long-term debt


443,908



406,113Accrued closure, post-closure
    and other obligations


41,841



32,625Non-current liabilities of
    discontinued operations






610Total liabilities


573,627



525,706Shareholders
    equity:Common stock $0.01 par value:
    166,666,666 shares authorized, 43,870,128 and
    43,868,606 shares issued and outstanding as of
    June 30, 2007 and December 31, 2006, respectively


438



438Additional paid-in capital


507,729



506,751Accumulated other comprehensive
    income


51,304



35,201Accumulated deficit


(221,111
)


(203,033
)Total shareholders
    equity


338,360



339,357Total liabilities and
    shareholders equity

$
911,987


$
865,063    2




---



##### 



WASTE
    SERVICES, INC.



UNAUDITED
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In
    thousands, except per share data)  Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Revenue

$
126,239


$
100,480


$
227,553


$
187,964Operating and other
    expenses:Cost of operations (exclusive of
    depreciation, depletion and amortization)


83,077



69,346



150,132



131,061Selling, general and
    administrative expense (exclusive of depreciation, depletion and
    amortization)


15,094



14,216



29,892



29,330Deferred acquisition costs














5,612Depreciation, depletion and
    amortization


15,122



9,746



27,091



19,092Foreign exchange (gain) loss and
    other


(165
)


2,247



(587
)


2,116Income from continuing
    operations


13,111



4,925



21,025



753Interest expense


10,830



7,825



20,575



14,880Cumulative mandatorily redeemable
    preferred stock dividends and amortization of issue costs






4,841







10,537Income (loss) from continuing
    operations before income taxes


2,281



(7,741
)


450



(24,664
)Income tax provision


4,407



3,368



6,144



4,340Net loss from continuing
    operations


(2,126
)


(11,109
)


(5,694
)


(29,004
)Net income (loss) from
    discontinued operations, net of tax of $0


(87
)


35



(1,130
)


(835
)Loss on sale of discontinued
    operations, net of tax of $0


(12,192
)






(11,254
)


Net loss

$
(14,405
)

$
(11,074
)

$
(18,078
)

$
(29,839
)Basic and diluted loss per
    share:Loss per share 
    continuing operations

$
(0.05
)

$
(0.33
)

$
(0.12
)

$
(0.86
)Loss per share 
    discontinued operations


(0.27
)






(0.27
)


(0.02
)Loss per share 
    basic and diluted

$
(0.32
)

$
(0.33
)

$
(0.39
)

$
(0.88
)Weighted average common shares
    outstanding  basic and diluted


45,973



34,130



45,973



33,756    3




---



##### 



WASTE
    SERVICES, INC.
    UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS
    EQUITY
    For the Six Months Ended June 30, 2007
    (In thousands)  AccumulatedWaste Services, Inc.





Other





TotalCommon Stock


Additional


Comprehensive


Accumulated


ShareholdersShares


Amount


Paid-in Capital


Income


Deficit


EquityBalance, December 31,
    2006


43,869


$
438


$
506,751


$
35,201


$
(203,033
)

$
339,357Exercise of warrants


1







5











5Stock-based compensation










973











973Foreign currency translation
    adjustment














16,103







16,103Net loss


















(18,078
)


(18,078
)Balance, June 30,
    2007


43,870


$
438


$
507,729


$
51,304


$
(221,111
)

$
338,360    4




---



##### 



WASTE
    SERVICES, INC.



UNAUDITED
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In
    thousands)  Six Months Ended June 30,2007


2006Cash flows from operating
    activities:Net loss

$
(18,078
)

$
(29,839
)Adjustments to reconcile net loss
    to net cash flows from operating activities:Net loss from discontinued
    operations


12,384



835Depreciation, depletion and
    amortization


27,091



19,092Cumulative mandatorily redeemable
    preferred stock dividends and amortization of issue costs






10,537Amortization of debt issue costs


1,315



776Deferred income tax provision


1,918



4,289Non-cash stock-based compensation
    expense


973



1,547Deferred acquisition costs expensed






5,612Foreign exchange loss






2,052Other non-cash items


211



342Changes in operating assets and
    liabilities (excluding the effects of acquisitions and
    dispositions):Accounts receivable


(3,547
)


(2,816
)Prepaid expenses and other current
    assets


(667
)


(608
)Accounts payable


(239
)


626Accrued expenses and other current
    liabilities


1,886



2,359Net cash provided by continuing
    operations


23,247



14,804Net cash provided by discontinued
    operations


1,567



2,667Net cash provided by operating
    activities


24,814



17,471Cash flows from investing
    activities:Cash used in business combinations
    and significant asset acquisitions, net of cash acquired


(31,888
)


(28,943
)Capital expenditures


(24,167
)


(24,252
)Proceeds from asset sales and
    business divestitures


16,091



4,530Deposits for business acquisitions
    and other


(9,528
)


(929
)Net cash used in continuing
    operations


(49,492
)


(49,594
)Net cash used in discontinued
    operations


(2,187
)


(3,370
)Net cash used in investing
    activities


(51,679
)


(52,964
)Cash flows from financing
    activities:Proceeds from issuance of debt and
    draw on revolving credit facility


84,014



36,197Principal repayments of debt and
    capital lease obligations


(49,190
)


(7,038
)Proceeds from the exercise of
    options and warrants


5



86Fees paid for financing transactions


(1,191
)


(138
)Cash provided by financing
    activities  continuing operations


33,638



29,107Effect of exchange rate changes on
    cash and cash equivalents


740



240Increase (decrease) in cash and
    cash equivalents


7,513



(6,146
)Cash and cash equivalents at the
    beginning of the period


8,532



8,886Cash and cash equivalents at the
    end of the period

$
16,045


$
2,740    5




---



##### 



WASTE
    SERVICES, INC.



NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  1.
    Organization
    of Business and Basis of Presentation    Form 10-K. Form 10-K
     6




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
          Three Months Ended June 30,


Six Months Ended June 30,2007


2006


2007


2006Common Shares issuable under
    exercisable options


35







50



Common Shares issuable under
    exercisable warrants


603



38



610



176Dilutive securities


638



38



660



176     2.
    Adopted
    Accounting   7




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
    
    an allocation or a shift of income between taxing jurisdictions,
    the characterization of income or a decision to exclude
    reporting taxable income in a tax return, or
    a decision to classify a transaction, entity, or other position
    in a tax return as tax exempt.        
    Federal  We are subject to U.S. federal tax
    examinations by tax authorities for the tax years ended
    December 31, 2003 to 2006.
    State  We are subject to state tax examinations by
    tax authorities for the tax years ended December 31, 2003
    to 2006.
    Canada  We are no longer subject to foreign tax
    examinations by tax authorities for years before January 1,
    1999.    3.
    Discontinued
    Operations   8




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
        Arizona


TexasOperations


Operations


TotalFair value of operations received

$
52,497


$
18,471


$
70,968Cash received, net of promissory
    note issued






15,690



15,690Less:Carrying value of operations sold


51,559



46,353



97,912Gain (loss) on disposition of
    discontinued operations

$
938


$
(12,192
)

$
(11,254
)   Net assets related to our
    discontinued operations as of December 31, 2006 are as
    follows (unaudited):   9




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  Arizona


TexasOperations


Operations


TotalAccounts receivable

$
3,418


$
658


$
4,076Prepaid expenses and other current
    assets


452



31



483Current assets of discontinued
    operations


3,870



689



4,559Property and equipment


11,803



4,646



16,449Landfill sites


17,229



41,456



58,685Goodwill and other intangible
    assets


21,433







21,433Other assets


121







121Non-current assets of discontinued
    operations


50,586



46,102



96,688Total assets of discontinued
    operations

$
54,456


$
46,791


$
101,247Accounts payable

$
356


$



$
356Accrued expenses and other current
    liabilities


3,518



910



4,428Current liabilities of
    discontinued operations


3,874



910



4,784Accrued closure, post closure and
    other obligations


336



274



610Non-current liabilities of
    discontinued operations


336



274



610Total liabilities of discontinued
    operations

$
4,210


$
1,184


$
5,394Net assets of discontinued
    operations

$
50,246


$
45,607


$
95,853   4.
    Share-Based
    Payments    Three Months Ended June 30,


Six Months Ended June 30,2007


2006


2007


2006Annual dividend yield






N/A







Weighted-average expected life
    (years)


3.0



N/A



3.0



3.0Risk-free interest rate


4.5
%


N/A



4.5
%


4.8
%Expected volatility


92
%


N/A



92
%


38
%    10




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
        5.
    Business
    Combinations and Significant Asset Acquisitions         11




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
    Allied





USA


AllSouth Florida


WCA


Recycling


Other


TotalPurchase price:Cash paid and transaction costs

$
15,882


$
10


$
13,408


$
1,351


$
30,651Fair value of operations received


52,497



18,471











70,968Total purchase price


68,379



18,481



13,408



1,351



101,619Allocated as follows:Working capital assumed:Cash and cash equivalents


1







84







85Accounts receivable


7,501



1,163











8,664Prepaid expenses and other current
    assets


290















290Accrued expenses and other current
    liabilities


(4,156
)


(85
)






(48
)


(4,289
)Net working capital


3,636



1,078



84



(48
)


4,750Property and equipment


13,078



5,185



8,037



648



26,948Accrued closure, post-closure and
    other obligations assumed






(312
)










(312
)Net book value of assets acquired
    and liabilities assumed


16,714



5,951



8,121



600



31,386Excess purchase price to be
    allocated

$
51,665


$
12,530


$
5,287


$
751


$
70,233Allocated as follows:Goodwill

$
15,886


$
10,542


$
3,066


$
386


$
29,880Other intangible assets


35,779



1,988



2,221



365



40,353Total allocated

$
51,665


$
12,530


$
5,287


$
751


$
70,233   and/or
 12




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
    Six Months EndedThree Months Ended June 30,


June 30,2007


2006


2007


2006Revenue

$
129,122


$
128,895


$
248,693


$
249,547Net loss

$
(2,193
)

$
(9,688
)

$
(4,571
)

$
(27,167
)Basic and diluted net loss per
    Common Share

$
(0.05
)

$
(0.27
)

$
(0.10
)

$
(0.75
)Basic and diluted pro forma
    weighted average number of common shares outstanding


45,973



36,186



45,973



36,067     6.
    Prepaid
    Expenses and Other Current Assets    June 30,


December 31,2007


2006Prepaid expenses

$
4,223


$
2,969Parts and supplies


2,003



1,710Other current assets


3,124



1,545$
9,350


$
6,224   7.
    Property
    and Equipment    June 30,


December 31,2007


2006Land and buildings

$
51,687


$
31,470Vehicles


136,147



116,436Containers, compactors and
    landfill and recycling equipment


95,304



74,597Furniture, fixtures, other office
    equipment and leasehold improvements


11,680



10,272Total property and equipment


294,818



232,775Less: Accumulated depreciation


(111,496
)


(92,102
)Property and equipment, net

$
183,322


$
140,673  13




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  8. Landfill
    Sites, Accrued Closure, Post-Closure and Other
    Obligations
  Landfill
    Sites
    June 30,


December 31,2007


2006Landfill sites

$
252,272


$
240,938Less: Accumulated depletion


(56,197
)


(45,057
)Landfill sites, net

$
196,075


$
195,881     June 30,2007


2006Balance at the beginning of the
    period

$
195,881


$
116,781Landfill site construction costs


7,046



6,594Reclassification to conservatory


(1,029
)


Acquisitions






23,290Additional asset retirement
    obligations


1,482



939Depletion


(8,644
)


(6,036
)Effect of foreign exchange rate
    fluctuations


1,339



436Balance at the end of the period

$
196,075


$
142,004   Accrued
    Closure, Post-Closure and Other Obligations
    June 30,


December 31,2007


2006Accrued closure and post-closure
    obligations

$
14,639


$
9,667Deferred income tax liability


25,682



22,322Capital lease obligations


985



186Other obligations


535



450$
41,841


$
32,625    14




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
    2007


2006Current portion at the beginning
    of period

$
6,258


$
Long-term portion at the beginning
    of period


9,667



8,971Balance at the beginning of period


15,925



8,971Additional asset retirement
    obligations


1,482



939Accretion


362



375Acquisitions






1,201Payments


(1,085
)


Effect of foreign exchange rate
    fluctuations


683



271Balance at the end of period


17,367



11,757Less: Current portion


(2,728
)


Long-term portion

$
14,639


$
11,757   9.
    Goodwill
    and Other Intangible Assets    June 30,


December 31,2007


2006Other intangible assets subject to
    amortization:Customer relationships and
    contracts

$
77,105


$
43,964Non-competition agreements and
    other


6,887



3,69483,992



47,658Less: Accumulated amortization:Customer relationships and
    contracts


(21,398
)


(17,080
)Non-competition agreements and
    other


(1,675
)


(2,435
)Other intangible assets subject to
    amortization, net


60,919



28,143Goodwill


361,061



321,892Goodwill and other intangible
    assets, net

$
421,980


$
350,035     Six Months Ended June 30, 2007Florida


Canada


TotalBalance at the beginning of the
    period

$
235,044


$
86,848


$
321,892Acquisitions


29,494



386



29,880Purchase price allocation
    adjustments for prior acquisitions


1,060



61



1,121Effect of foreign exchange rate
    fluctuations






8,168



8,168Balance at the end of the period

$
265,598


$
95,463


$
361,061   15




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  Six Months Ended June 30, 2006Florida


Canada


TotalBalance at the beginning of the
    period

$
199,377


$
84,869


$
284,246Acquisitions


27,093



1,672



28,765Purchase price allocation
    adjustments for prior acquisitions


(259
)






(259
)Effect of foreign exchange rate
    fluctuations






3,559



3,559Balance at the end of the period

$
226,211


$
90,100


$
316,311   10.
    Other
    Assets    June 30,


December 31,2007


2006Debt issue costs, net of
    accumulated amortization of $4,740 and $3,853 as of
    June 30, 2007 and December 31, 2006, respectively

$
8,801


$
9,060Acquisition deposits and deferred
    acquisition costs


9,069



1,048Other assets


550



559$
18,420


$
10,667     11.
    Debt    June 30,


December 31,2007


2006Senior Secured Credit Facilities:Revolving credit facility

$



$
Term loan facility, floating
    interest rate at 7.8% as of June 30, 2007 and 10.0%
    (adjusted to 8.1% in January 2007) as of December 31,
    2006, due $693 per quarter from September 2008 through March
    2010, $67,264 per quarter thereafter, due March 2011


273,910



245,260Senior Subordinated Notes, fixed
    interest rate at 9.5%, due 2014


160,000



160,000Other secured notes payable,
    interest at 4.3% to 7.8%, due through 2025 (net of discount of
    $2,486 and $0 at June 30, 2007 and December 31, 2006,
    respectively)


8,372



2,041Other subordinated notes payable,
    interest at 6.7%, due through 2017


2,695



2,787444,977



410,088Less: Current portion


(1,069
)


(3,975
)Long-term portion

$
443,908


$
406,113  16




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  Senior
    Secured Credit Facilities
        Other
    Secured Notes Payable
    Senior
    Subordinated Notes
  1 2
 17




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
      12.
    Cumulative
    Mandatorily Redeemable Preferred Stock    and/or
  13.
    Commitments
    and Contingencies  Environmental
    Risks
     18




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  Legal
    Proceedings
        Surety
    Bonds, Letters of Credit and Insurance
     19




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
    Six Months Ended June 30,2007


2006Balance at the beginning of the
    period

$
5,327


$
4,356Provisions


2,214



2,575Payments


(2,250
)


(1,317
)Unfavorable (favorable) claim
    development for prior periods


62



(315
)Balance at the end of the period

$
5,353


$
5,299   Disposal
    Agreement
  and/or
    Other
    Contractual Arrangements
    14.
    Authorized
    Capital Stock and Migration Transaction  Total
    Shares
    
    166,666,666 shares of common stock, par value 0.01 per
    share; and 20




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
   
    5,000,000 shares of preferred stock, par value 0.01 per
    share, of which 45,000 shares have been designated as
    Series A Preferred Stock and one share has been designated
    as Special Voting Preferred Stock.  Preferred
    Stock
    Migration
    Transaction
    non-U.S. residents
     21




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  15.
    Comprehensive
    Income (Loss)    Three Months Ended June 30,


Six Months Ended June 30,2007


2006


2007


2006Net loss

$
(14,405
)

$
(11,074
)

$
(18,078
)

$
(29,839
)Foreign currency translation
    adjustment


14,505



8,136



16,103



7,401Comprehensive income (loss)

$
100


$
(2,938
)

$
(1,975
)

$
(22,438
)   16.
    Segment
    Information        Three Months Ended June 30, 2007Florida


Canada


Corporate


TotalRevenue

$
70,381


$
55,858


$



$
126,239Depreciation, depletion and
    amortization


10,137



4,652



333



15,122Income (loss) from continuing
    operations


8,731



10,418



(6,038
)


13,111Capital expenditures


12,204



3,628



324



16,156   Three Months Ended June 30, 2006Florida


Canada


Corporate


TotalRevenue

$
52,637


$
47,843


$



$
100,480Depreciation, depletion and
    amortization


5,581



3,792



373



9,746Income (loss) from continuing
    operations


7,284



7,755



(10,114
)


4,925Capital expenditures


2,918



9,655



292



12,865   22




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  Six Months Ended June 30, 2007Florida


Canada


Corporate


TotalRevenue

$
126,893


$
100,660


$



$
227,553Depreciation, depletion and
    amortization


18,124



8,315



652



27,091Income (loss) from continuing
    operations


16,951



16,709



(12,635
)


21,025Capital expenditures


16,047



7,272



848



24,167   Six Months Ended June 30, 2006Florida


Canada


Corporate


TotalRevenue

$
101,030


$
86,934


$



$
187,964Depreciation, depletion and
    amortization


10,855



7,480



757



19,092Income (loss) from continuing
    operations


12,788



12,379



(24,414
)


753Capital expenditures


10,260



13,178



814



24,252   17.
    Condensed
    Consolidating Financial Statements   23




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
    June 30, 2007Non-Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assets:Cash and cash equivalents

$
7,516


$
8,529


$



$
16,045Accounts receivable, net


33,250



33,545







66,795Prepaid expenses and other current
    assets


3,203



6,147







9,350Total current assets


43,969



48,221







92,190Property and equipment,
    net


108,538



74,784







183,322Landfill sites, net


180,274



15,801







196,075Goodwill and other intangible
    assets, net


325,207



96,773







421,980Other assets


18,420











18,420Due from affiliates






637



(637
)


Investment in
    subsidiary


190,017







(190,017
)


Total assets

$
866,425


$
236,216


$
(190,654
)

$
911,987LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
14,606


$
10,922


$



$
25,528Accrued expenses and other current
    liabilities


41,534



19,747







61,281Short-term financing and current
    portion of long-term debt


1,069











1,069Current liabilities of
    discontinued operations














Total current liabilities


57,209



30,669







87,878Long-term debt


443,908











443,908Accrued closure, post-closure
    and other obligations


26,311



15,530







41,841Due to affiliates


637







(637
)


Total liabilities


528,065



46,199



(637
)


573,627Shareholders
    equity:Common stock of Waste Services, Inc


438











438Other equity


337,922



190,017



(190,017
)


337,922Total shareholders
    equity


338,360



190,017



(190,017
)


338,360Total liabilities and
    shareholders equity

$
866,425


$
236,216


$
(190,654
)

$
911,987   24




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006Non-Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assets:Cash and cash equivalents

$
2,753


$
5,779


$



$
8,532Accounts receivable, net


24,144



27,660







51,804Prepaid expenses and other current
    assets


2,862



3,362







6,224Current assets of discontinued
    operations


4,559











4,559Total current assets


34,318



36,801







71,119Property and equipment,
    net


71,472



69,201







140,673Landfill sites, net


182,050



13,831







195,881Goodwill and other intangible
    assets, net


262,056



87,979







350,035Other assets


10,667











10,667Due from affiliates






344



(344
)


Investment in
    subsidiary


167,448







(167,448
)


Non-current assets of
    discontinued operations


96,688











96,688Total assets

$
824,699


$
208,156


$
(167,792
)

$
865,063LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
12,600


$
11,433


$



$
24,033Accrued expenses and other current
    liabilities


38,103



15,463







53,566Short-term financing and current














portion of long-term debt


3,975











3,975Current liabilities of
    discontinued operations


4,784











4,784Total current liabilities


59,462



26,896







86,358Long-term debt


406,113











406,113Accrued closure, post-closure
    and other obligations


18,813



13,812







32,625Due to affiliates


344







(344
)


Non-current liabilities of
    discontinued operations


610











610Total liabilities


485,342



40,708



(344
)


525,706Shareholders
    equity:Common stock of Waste Services, Inc


438











438Other equity


338,919



167,448



(167,448
)


338,919Total shareholders
    equity


339,357



167,448



(167,448
)


339,357Total liabilities and
    shareholders equity

$
824,699


$
208,156


$
(167,792
)

$
865,063   25




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  Three Months Ended June 30,2007Non-Guarantors


Guarantors


Eliminations


ConsolidatedRevenue

$
70,381


$
55,858


$



$
126,239Operating and other
    expenses:Cost of operations (exclusive of
    depreciation, depletion and amortization)


46,479



36,598







83,077Selling, general and administrative
    expense (exclusive of depreciation, depletion and amortization)


8,465



6,629







15,094Depreciation, depletion and
    amortization


10,154



4,968







15,122Foreign exchange gain and other


(121
)


(44
)






(165
)Equity earnings in investees


(4,909
)






4,909



Income from continuing
    operations


10,313



7,707



(4,909
)


13,111Interest expense


10,747



83







10,830Income (loss) from continuing
    operations before income taxes


(434
)


7,624



(4,909
)


2,281Income tax provision


1,692



2,715







4,407Net income (loss) from
    continuing operations


(2,126
)


4,909



(4,909
)


(2,126
)Net loss from discontinued
    operations


(87
)










(87
)Loss on sale of discontinued
    operations


(12,192
)










(12,192
)Net income (loss)

$
(14,405
)

$
4,909


$
(4,909
)

$
(14,405
)   Three Months Ended June 30, 2006Non-Guarantors


Guarantors


Eliminations


ConsolidatedRevenue

$
52,637


$
47,843


$



$
100,480Operating and other
    expenses:Cost of operations (exclusive of
    depreciation, depletion and amortization)


36,580



32,766







69,346Selling, general and
    administrative expense (exclusive of depreciation, depletion and
    amortization)


8,487



5,729







14,216Depreciation, depletion and
    amortization


5,592



4,154







9,746Foreign exchange loss and other


85



2,162







2,247Equity earnings in investees


(1,017
)






1,017



Income from continuing
    operations


2,910



3,032



(1,017
)


4,925Interest expense


7,704



121







7,825Cumulative mandatorily redeemable
    preferred stock dividends and amortization of issue costs


4,841











4,841Income (loss) from continuing
    operations before income taxes


(9,635
)


2,911



(1,017
)


(7,741
)Income tax provision


1,474



1,894







3,368Net income (loss) from continuing
    operations


(11,109
)


1,017



(1,017
)


(11,109
)Net income from discontinued
    operations


35











35Net income (loss)

$
(11,074
)

$
1,017


$
(1,017
)

$
(11,074
)   26




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  Six Months Ended June 30, 2007Non-Guarantors


Guarantors


Eliminations


ConsolidatedRevenue

$
126,893


$
100,660


$



$
227,553Operating and other
    expenses:Cost of operations (exclusive of
    depreciation, depletion and amortization)


82,703



67,429







150,132Selling, general and
    administrative expense (exclusive of depreciation, depletion and
    amortization)


16,961



12,931







29,892Depreciation, depletion and
    amortization


18,155



8,936







27,091Foreign exchange gain and other


(332
)


(255
)






(587
)Equity earnings in investees


(7,125
)






7,125



Income from continuing
    operations


16,531



11,619



(7,125
)


21,025Interest expense


20,437



138







20,575Income (loss) from continuing
    operations before income taxes


(3,906
)


11,481



(7,125
)


450Income tax provision


1,788



4,356







6,144Net income (loss) from
    continuing operations


(5,694
)


7,125



(7,125
)


(5,694
)Net loss from discontinued
    operations


(1,130
)










(1,130
)Loss on sale of discontinued
    operations


(11,254
)










(11,254
)Net income (loss)

$
(18,078
)

$
7,125


$
(7,125
)

$
(18,078
)   Six Months Ended June 30, 2006Non-Guarantors


Guarantors


Eliminations


ConsolidatedRevenue

$
101,030


$
86,934


$



$
187,964Operating and other
    expenses:Cost of operations (exclusive of
    depreciation, depletion and amortization)


71,071



59,990







131,061Selling, general and administrative
    expense (exclusive of depreciation, depletion and amortization)


17,529



11,801







29,330Deferred acquisition costs


439



5,173







5,612Depreciation, depletion and
    amortization


10,875



8,217







19,092Foreign exchange loss and other


90



2,026







2,116Equity earnings in investees


1,991







(1,991
)


Income (loss) from continuing
    operations


(965
)


(273
)


1,991



753Interest expense


14,663



217







14,880Cumulative mandatorily redeemable
    preferred stock dividends and amortization of issue costs


10,537











10,537Loss from continuing operations
    before income taxes


(26,165
)


(490
)


1,991



(24,664
)Income tax provision


2,839



1,501







4,340Net loss from continuing operations


(29,004
)


(1,991
)


1,991



(29,004
)Net loss from discontinued
    operations


(835
)










(835
)Net loss

$
(29,839
)

$
(1,991
)

$
1,991


$
(29,839
)   27




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  Six Months Ended June 30, 2007Non-Guarantors


Guarantors


Eliminations


ConsolidatedNet cash provided by operating
    activities

$
9,565


$
15,249


$



$
24,814Cash flows from investing
    activities:Cash used in business combinations
    and significant asset acquisitions, net of cash acquired


(30,491
)


(1,397
)






(31,888
)Capital expenditures


(16,151
)


(8,016
)






(24,167
)Proceeds from asset sales and
    business divestitures


16,050



41







16,091Deposits for business acquisitions
    and other


(7,973
)


(1,555
)






(9,528
)Intercompany






(2,312
)


2,312



Net cash used in continuing
    operations


(38,565
)


(13,239
)


2,312



(49,492
)Net cash used in discontinued
    operations


(2,187
)










(2,187
)Net cash used in investing
    activities


(40,752
)


(13,239
)


2,312



(51,679
)Cash flows from financing
    activities:Proceeds from issuance of debt and
    draws on revolving credit facility


84,014











84,014Principal repayments of debt and
    capital lease obligations


(49,190
)










(49,190
)Proceeds from the exercise of
    options and warrants


5











5Fees paid for financing
    transactions


(1,191
)










(1,191
)Intercompany


2,312







(2,312
)


Net cash provided by financing
    activities  continuing operations


35,950







(2,312
)


33,638Effect of exchange rate changes on
    cash and cash equivalents






740







740Increase in cash and cash
    equivalents


4,763



2,750







7,513Cash and cash equivalents at the
    beginning of the period


2,753



5,779







8,532Cash and cash equivalents at the
    end of the period

$
7,516


$
8,529


$



$
16,045   28




---



##### 



WASTE
    SERVICES, INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS  (Continued)
  Six Months Ended June 30, 2006Non-Guarantors


Guarantors


Eliminations


ConsolidatedNet cash provided by operating
    activities

$
2,451


$
15,020


$



$
17,471Cash flows from investing
    activities:Cash used in business combinations
    and significant asset acquisitions, net of cash acquired


(26,415
)


(2,528
)






(28,943
)Capital expenditures


(10,470
)


(13,782
)






(24,252
)Proceeds from asset sales and
    business divestitures


4,183



347







4,530Share reimbursement agreement


(929
)










(929
)Intercompany






(2,955
)


2,955



Net cash used in continuing
    operations


(33,631
)


(18,918
)


2,955



(49,594
)Net cash used in discontinued
    operations


(3,370
)










(3,370
)Net cash used in investing
    activities


(37,001
)


(18,918
)


2,955



(52,964
)Cash flows from financing
    activities:Proceeds from issuance of debt and
    draw on revolving credit facility


34,000



2,197







36,197Principal repayments of debt and
    capital lease obligations


(4,376
)


(2,662
)






(7,038
)Proceeds from the exercise of
    options and warrants


86











86Fees paid for financing
    transactions


(138
)










(138
)Intercompany


2,955







(2,955
)


Net cash provided by (used in)
    financing activities  continuing operations


32,527



(465
)


(2,955
)


29,107Effect of exchange rate changes on
    cash and cash equivalents






240







240Decrease in cash and cash
    equivalents


(2,023
)


(4,123
)






(6,146
)Cash and cash equivalents at the
    beginning of the period


3,680



5,206







8,886Cash and cash equivalents at the
    end of the period

$
1,657


$
1,083


$



$
2,740  29




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K
  Overview
    Sources
    of Revenue
           30




---



##### 



Expense
    Structure
              Recent
    Developments
     31




---



##### 



Results
    of Operations for the Three and Six Months Ended June 30,
    2007 and 2006
   32




---



##### 



Three Months Ended June 30, 2007US





Canada





TotalRevenue

$
70,381



100.0
%

$
55,858



100.0
%

$
126,239



100.0
%Operating expenses:Cost of operations


46,479



66.0
%


36,598



65.5
%


83,077



65.8
%Selling, general and
    administrative expense


8,465



12.0
%


6,629



11.9
%


15,094



12.0
%Depreciation, depletion and
    amortization


10,154



14.4
%


4,968



8.9
%


15,122



12.0
%Foreign exchange gain and other


(121
)


-0.1
%


(44
)


-0.1
%


(165
)


-0.2
%Income from operations

$
5,404



7.7
%

$
7,707



13.8
%

$
13,111



10.4
%   Three Months Ended June 30, 2006US





Canada





TotalRevenue

$
52,637



100.0
%

$
47,843



100.0
%

$
100,480



100.0
%Operating expenses:Cost of operations


36,580



69.5
%


32,766



68.5
%


69,346



69.0
%Selling, general and
    administrative expense


8,487



16.1
%


5,729



12.0
%


14,216



14.1
%Depreciation, depletion and
    amortization


5,592



10.6
%


4,154



8.7
%


9,746



9.7
%Foreign exchange loss and other


85



0.2
%


2,162



4.5
%


2,247



2.3
%Income from operations

$
1,893



3.6
%

$
3,032



6.3
%

$
4,925



4.9
%   Six Months Ended June 30, 2007US





Canada





TotalRevenue

$
126,893



100.0
%

$
100,660



100.0
%

$
227,553



100.0
%Operating expenses:Cost of operations


82,703



65.2
%


67,429



67.0
%


150,132



66.0
%Selling, general and
    administrative expense


16,961



13.4
%


12,931



12.8
%


29,892



13.1
%Depreciation, depletion and
    amortization


18,155



14.3
%


8,936



8.9
%


27,091



11.9
%Foreign exchange gain and other


(332
)


-0.3
%


(255
)


-0.2
%


(587
)


-0.2
%Income from operations

$
9,406



7.4
%

$
11,619



11.5
%

$
21,025



9.2
%   Six Months Ended June 30, 2006US





Canada





TotalRevenue

$
101,030



100.0
%

$
86,934



100.0
%

$
187,964



100.0
%Operating expenses:Cost of operations


71,071



70.3
%


59,990



69.0
%


131,061



69.7
%Selling, general and
    administrative expense


17,529



17.4
%


11,801



13.6
%


29,330



15.6
%Deferred acquisition costs


439



0.4
%


5,173



6.0
%


5,612



3.0
%Depreciation, depletion and
    amortization


10,875



10.9
%


8,217



9.4
%


19,092



10.2
%Foreign exchange loss and other


90



0.0
%


2,026



2.3
%


2,116



1.1
%Income (loss) from operations

$
1,026



1.0
%

$
(273
)


-0.3
%

$
753



0.4
%  33




---



##### 



Revenue
    Three Months Ended June 30,


Six Months Ended June 30,2007


2006


2007


2006Collection

$
103,435



74.1
%

$
83,072



76.2
%

$
184,103



73.0
%

$
156,603



77.6
%Landfill disposal


15,072



10.8
%


11,905



10.9
%


29,501



11.7
%


22,417



11.1
%Transfer station


15,480



11.1
%


10,852



10.0
%


29,267



11.6
%


17,267



8.6
%Material recovery facilities


5,177



3.7
%


2,845



2.6
%


8,740



3.5
%


5,098



2.5
%Other specialized services


368



0.3
%


290



0.3
%


508



0.2
%


441



0.2
%139,532



100.0
%


108,964



100.0
%


252,119



100.0
%


201,826



100.0
%Intercompany elimination


(13,293
)






(8,484
)






(24,566
)






(13,862
)$
126,239






$
100,480






$
227,553






$
187,964   TotalThree Months Ended June 30,

Florida


Canada


Revenue2007

$
70,381


$
55,858


$
126,2392006


52,637



47,843



100,480   TotalSix Months Ended June 30,

Florida


Canada


Revenue2007

$
126,893


$
100,660


$
227,5532006


101,030



86,934



187,964          34




---



##### 



Cost
    of Operations
              Selling,
    General and Administrative Expense
     35




---



##### 



Deferred
    Acquisition Costs
    Depreciation,
    Depletion and Amortization
      Foreign
    Exchange Gain and Other
     36




---



##### 



Interest
    Expense
    Three Months Ended June 30,


Six Months Ended June 30,2007


2006


2007


2006Credit Facility and Senior
    Subordinated Note interest

$
9,589


$
6,953


$
18,524


$
13,119Amortization of debt issue costs


831



388



1,315



776Preferred Stock dividends and
    amortization of issue costs






4,841







10,537Other interest expense


410



484



736



985$
10,830


$
12,666


$
20,575


$
25,417     Income
    Tax Provision
    Liquidity
    and Capital Resources
  and/or
  Senior
    Secured Credit Facilities
   37




---



##### 



Other
    Secured Notes Payable
    Senior
    Subordinated Notes
  1 2
     38




---



##### 



Migration
    Transaction
    non-U.S. residents
      Surety
    Bonds, Letters of Credit and Insurance
    U.S.-based
  Cash
    Flows
   39




---



##### 



Cash
    Flows from Operating Activities
    Cash
    Flows from Investing Activities
    Cash
    Flows from Financing Activities
    Cash
    Flow from Discontinued Operations
    Off-Balance
    Sheet Financing
  and/or Form 10-K.
 40




---



##### 



Landfill
    Sites
    Balance,





Changes in


Balance,Beginning


Airspace


Engineering


Endof Period


Consumed


Estimates


of PeriodUnited StatesPermitted capacity


54,992



(1,585
)






53,407Probable expansion capacity


18,300











18,300Total available airspace


73,292



(1,585
)






71,707Number of sites


4











4CanadaPermitted capacity


11,644



(389
)






11,255Probable expansion capacity


4,970







(262
)


4,708Total available airspace


16,614



(389
)


(262
)


15,963Number of sites


3











3TotalPermitted capacity


66,636



(1,974
)






64,662Probable expansion capacity


23,270







(262
)


23,008Total available airspace


89,906



(1,974
)


(262
)


87,670Number of sites


7











7   Trend
    Information
  Seasonality
    New
    Accounting Pronouncements
   41




---



##### 



Disclosure
    Regarding Forward-Looking Statements and Factors Affecting
    Future Results
  Form 10-Q
    
    our substantial indebtedness and the significant restrictive
    covenants in our various credit facilities and our ability to
    finance acquisitions with cash on hand, debt or equity offerings;
    our business is capital intensive and may consume cash in excess
    of cash flow from operations and borrowings;
    our ability to vertically integrate our operations;
    our ability to maintain and perform our financial assurance
    obligations;
    changes in regulations affecting our business and costs of
    compliance;
    revocation of existing permits and licenses or the refusal to
    renew or grant new permits and licenses, which are required to
    enable us to operate our business or implement our growth
    strategy;
    our ability to successfully implement our corporate strategy and
    integrate any acquisitions we undertake;
    our ability to negotiate renewals of existing service agreements
    at favorable rates;
    our ability to enhance profitability of certain aspects of our
    operations in markets where we are not internalized through
    either divestiture or asset swaps;
    costs and risks associated with litigation;
    changes in general business and economic conditions, exchange
    rates and the financial markets and accounting standards or
    pronouncements; and
    construction, equipment delivery or permitting delays for our
    transfer stations or landfills.  Form 10-K, Form 10-Q
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk   42




---



##### 



Item 4.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rule 13a-15).
  Changes
    in Internal Controls Over Financial Reporting
   43




---



##### 



PART II.  OTHER
    INFORMATION
  Item 1.
    Legal
    Proceedings    Item 1A.  Risk
    Factors
  Form 10-K
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds    Item 3.
    Defaults
    upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Nominee

Number of Votes For


Number of Votes WithheldGary W. DeGroote


43,254,353



304,504David Sutherland-Yoest


43,287,125



271,732George E. Matelich


43,202,524



356,333Michael B. Lazar


43,280,872



277,985   Item 5.
    Other
    Information    Item 6.
    Exhibits  Exhibit 4.1
    
    Supplemental Indenture, dated as of April 12, 2007, among
    U.S.A. Recycling Holdings L.L.C., U.S.A. Recycling L.L.C. and
    Freedom Recycling Holdings, the other guarantors and Wells Fargo
    Bank, National Association, as Trustee.Exhibit 31.1
    
    Section 302 Certification of David Sutherland-Yoest, Chief
    Executive OfficerExhibit 31.2
    
    Section 302 Certification of Edwin D. Johnson, Chief
    Financial OfficerExhibit 32.1
    
    Section 1350 Certification of the Chief Executive Officer
    and Chief Financial Officer 44




---



##### 



SIGNATURES       By:
    /s/  DAVID
    SUTHERLAND-YOEST   Chairman of the Board,
 Chief Executive Officer
  By:
    /s/  EDWIN
    D. JOHNSON   Executive Vice President,
 Chief Financial Officer
 45




---



##### 



EXHIBIT INDEX
  Exhibit No


DescriptionExhibit 4.1


Supplemental Indenture, dated as
    of April 12, 2007, among U.S.A. Recycling Holdings L.L.C.,
    U.S.A. Recycling L.L.C. and Freedom Recycling Holdings, the
    other guarantors and Wells Fargo Bank, National Association, as
    Trustee.Exhibit 31.1


Section 302 Certification of David
    Sutherland-Yoest, Chief Executive OfficerExhibit 31.2


Section 302 Certification of Edwin
    D. Johnson, Chief Financial OfficerExhibit 32.1


Section 1350 Certification of the
    Chief Executive Officer and Principal Financial Officer